Image Credits - asia.nikkei
Amorepacific, one of South Korea’s largest cosmetics companies, saw its share price plunge by 30% following the release of disappointing second-quarter earnings. Despite a slight increase in operating profit by 0.4% to KRW 5.9 billion (USD 4.6 million), the company’s revenue remained stagnant, dipping marginally by 0.04% to KRW 945.4 billion (USD 983 million). The market reacted sharply to these results, with the primary concern being a steep 11.6% drop in domestic sales, which offset gains in international markets.
The luxury and premium segments, which include well-known brands such as Sulwhasoo, Hera, and Laneige, were particularly hard-hit in South Korea. Sulwhasoo and Hera experienced a 12% decline, while the premium segment, encompassing brands like Laneige and Mamonde, saw a 24% drop in domestic sales. These declines were a significant drag on the company’s overall performance, overshadowing robust growth in overseas markets.
Internationally, Amorepacific showed resilience, with China posting more than 20% revenue growth in local currency terms, while Japan saw a 30% increase. North America emerged as a bright spot, with revenue doubling thanks to strong performances from Sulwhasoo, Laneige, and Innisfree. However, these gains were not enough to offset the domestic slump.
The company’s struggles in its home market highlight broader challenges facing the South Korean beauty industry, where consumer demand has been sluggish. Efforts to revitalize its flagship brand Sulwhasoo through rebranding and global campaigns, including tapping actress Tilda Swinton as a brand ambassador, have yet to deliver significant results.
As the company continues to face fierce competition and evolving consumer preferences, its ability to navigate these headwinds will be crucial to restoring investor confidence and maintaining its market position.